If this email does not display properly, please click here Interim economic forecast: EU recovery faster than foreseen, inflation to remain subdued Commission concludes effective action was taken by Lithuania and Romania in excessive deficit procedure Estonia marks accession to euro with "Euro Conference Estonia 2010" Euro exhibition opens in Tallinn Commission adopts proposals on derivatives, credit default swaps and short selling Second tranche of Greek Loan Facility disbursed Council approves EU framework for supervision of financial system Interim economic forecast: EU recovery faster than foreseen, inflation to remain subdued The EU economy, while still fragile, is recovering at a faster pace than previously envisaged. According to the latest interim economic forecast published on 13 September, annual GDP growth in 2010 is now forecast at 1.8% in the EU and 1.7% in the euro area. This represents a sizeable upward revision compared to the spring forecast (1.0% for the EU and 0.9% for the euro area), reflecting largely a better-than-expected outcome in the first half of the year. The improved outlook also reflects signs of a favourable rebalancing of growth towards domestic demand. In terms of a quarterly profile, GDP is now expected to expand by 0.5% in both the EU and euro area in the third quarter and by 0.4% and 0.3% respectively in the fourth quarter. At the same time, revisions to the inflation forecast are minor, as the first half of the year came broadly in line with expectations and the outlook is broadly unchanged (1.4% in the euro area, 1.8% in the EU). The projections are based on an update of the outlook for the seven largest Member States. The European economy is clearly on a path of recovery, more strongly than forecast in the spring, and the rebound of domestic demand bodes well for the job market. However, uncertainties remain. Safeguarding financial stability and continuing fiscal consolidation remain key priorities. At the same time, we need to frontload structural reforms to lift our growth potential. The sooner and stronger we act on this front, the more certain we can be of sustained growth and job creation. Oli Rehn, Commissioner for Economic and Monetary Affairs Commission concludes effective action was taken by Lithuania and Romania in excessive deficit procedure The Commission has concluded that the Lithuanian and Romanian authorities have taken effective action to correct their respective excessive government deficits. The assessment, announced on 21 September, states that the authorities of the two countries have implemented measures in accordance with the Council recommendation of 16 February 2010 and that no further steps in the excessive deficit procedure are needed at present. The Lithuanian authorities have implemented significant corrective fiscal measures and have outlined a consolidation strategy for correction of the excessive deficit by 2012. Romania is on track to achieve the 2010 government deficit target and to bring the deficit below 3% of GDP by 2012. Estonia marks accession to euro with "Euro Conference Estonia 2010" On 1 January 2011 Estonia will join the euro area and the euro will replace the kroon as legal tender. To mark this occasion, the government of the Republic of Estonia and Eesti Pank, in collaboration with the European Commission and the European Central Bank, hosted the "Euro Conference Estonia 2010" on 20 September at the Estonia Concert Hall in Tallinn. The conference focused on both the political and practical aspects of euro area enlargement, addressing topics such as economic policy and policy co-ordination in Europe. It was followed by a press conference held by ECB President Jean-Claude Trichet, Commissioner Olli Rehn, the Estonian Minister of Finance Jürgen Ligi and Governor of Eesti Pank Andres Lipstok. Euro exhibition opens in Tallinn After successful stops in seven Member States, the European Commission's travelling euro exhibition has arrived in Tallinn. It has already become familiar to the Estonian public as before it had been shown for 28 days in Narva to 16 000 visitors. In Tallinn it joins an exhibition by the European Central Bank. This is the first time these exhibitions are displayed together. What makes this stop so special is that it arrived in Tallinn, the capital of the next country to join the euro area. The exhibition was opened on 20 September by Commissioner Olli Rehn, ECB President Jean-Claude Trichet, Eesti Bank Governor Andres Lipstok and the Estonian Minister of Finance Jürgen Ligi. The euro exhibition not only informs on the production of banknotes and their security features, but goes well beyond: it shows the history of the euro, the way Economic and Monetary Union (EMU) works, and the many benefits EMU brings. Visitors can use interactive touch screens and audiovisual elements and test their knowledge on the euro by taking a quiz. Children can journey through a virtual island where they will discover the euro. After its stop in Tallinn until 31 October, the exhibition will be shown in Tartu from 8 November to 5 December 2010. Commission adopts proposals on derivatives, credit default swaps and short selling On 15 September, the Commission adopted two proposals for regulations to enhance transparency and reduce risk in financial markets. One proposal would require that all share orders on trading venues be marked as ‘short’ if they involve a short sale, as well as the disclosure of net short positions above certain thresholds to regulators and to the market. The proposal also gives national regulators clear powers in exceptional situations to temporarily restrict or ban short selling. Another proposal would require that information on over-the-counter (OTC) derivative contracts be reported to trade repositories and be accessible to supervisory authorities. It also would require that standard OTC derivative contracts be cleared through central counterparties (CCPs). Once adopted by the European Parliament and the Council, the regulations would come into force from the end of 2012. Second tranche of Greek Loan Facility disbursed The second loan under the Greek Loan Facility was successfully disbursed to Greece on 13 September for an amount of EUR 6.5 billion. The latest loan was approved based on the favourable outcome of a review carried out by the Commission during the summer. The latest payment brings total disbursements by euro area Member States under the loan facility to EUR 21 billion. In parallel, the IMF has disbursed a total of EUR 8 billion (the first in May for EUR 5.5 billion, and the second in September for EUR 2.5 billion) bringing the consolidated disbursements from euro area Member States and the IMF to EUR 29 billion. Council approves EU framework for supervision of financial system On 7 September, the Council endorsed an agreement reached with the European Parliament on reform of the EU framework for supervision of the financial system. The reform establishes a European Systemic Risk Board (ESRB), which will provide macro-prudential oversight of the financial system, and three supervisory authorities: a European Banking Authority (EBA), a European Insurance and Occupational Pensions Authority and a European Securities and Markets Authority. The agreement with the Parliament will enable all of these bodies to be operational as planned from 1 January 2011.   Five years of an enlarged EU - A positive sum game This book, edited by Istvan Szekely and Filip Keereman of DG ECFIN and published in September 2010 by Springer, summarizes the economic performance of the EU in the first five years after its largest expansion in 2004. With the benefit of five years experience, this book brings together experts from academia and think-tanks to assess the driving forces of economic growth and real convergence. It is shown that while enlargement has been a success story overall, growth and catching-up cannot be taken for granted and the importance of economic policy remains undiminished. Macroeconomic effects of Europe 2020: stylised scenarios. Economic Briefs 11/2010, Economic Briefs 11/2010 Determinants of capital flows to the new EU Member States before and during the financial crisis, Economic Paper 425 Fiscal stimulus and exit strategies in the EU: a model-based analysis. Economic Paper 426 Comparing alternative methodologies for real exchange rate assessment. Economic Paper 427 Upcoming: Quarterly report on the euro area Upcoming: Monitoring revenue trends 29 September Brussels Legislative proposals package on economic governance in the EU 30 September- 1 October Brussels Informal Eurogroup/ECOFIN Council 1 October Brussels ECFIN workshop: Capital flows to converging European economies - from boom to drought and beyond 8-10 October Washington, D.C. Annual meetings of the IMF and the World Bank Group 18-19 October Brussels Eurogroup/ECOFIN Council 28-29 October Brussels European Council 11-12 November Seoul, Korea G20 Summit 22-23 November Brussels DG ECFIN 7th Annual Research Conference 2010 29 November Brussels European economic forecast autumn 2010 Open invitation to tender ECFIN/R3/2010/012 - For conclusion of Multiple Framework Contracts in Competition for the provision of evaluation and evaluation related services to DG ECFIN, including support for impact assessment activities (deadline for submission: 22 October 2010) Directorate-General for Economic and Financial Affairs